The release was generally well-received, with the unemployment rate falling to 6.1% and other details in the report matching expectations. While stocks did not seem to focus on possible policy implications, Treasuries weakened on the news, with yields initially jumping sharply. The 10-year yield touched 2.69%, but later came back to 2.65%. Recall it was trading around 2.52% on Monday. There were several other economic releases and while none were particularly impactful, they generally continued the trend of this week's upbeat data. The ECB meeting went as expected with interest rates left unchanged and Mario Draghi's press conference contained few surprises. Cyclical sectors outperformed, with groups within industrials and materials showing particular strength. The rise in bond yields provided support for banks, but utilities came under further pressure. The dollar was broadly stronger, with gold and oil lower. Jobs data beats expectations: US nonfarm payrolls were stronger than expected for June, rising 288K versus expectations of +215K. Also, May's figure was revised higher to 224K and April's was revised up to 304K. The payrolls have now surpassed 200K for the last five months, a feat not realized since January 2000. The unemployment rate was also better than expected, falling to 6.1% from 6.3%, with the consensus forecasting no change. Other factors that have gained increased attention in recent months were in line with expectations as average hourly earnings rose 0.2% m/m and average weekly hours were unchanged at 34.5, while the labor force participation rate held steady at 62.8%. However, new jobs continued to be driven by lower-paying sectors with retail and leisure and hospitality making the strongest gains while increases in manufacturing and construction lagged. Other economic data also upbeat: Today's other data releases were also relatively upbeat, highlighted by a reading in the ISM non-manufacturing index that showed continued growth in June. The measure came in at 56.0, marginally below 56.2 expectations, but showed stronger-than-forecast growth in new orders. The employment component also rose and prices were steady, although there was a slowdown in the the business index. Elsewhere, the trade balance for May narrowed slightly more than expected, with exports growing 1.0% after a 0.1% decline in the prior month. Weekly jobless figures were also released, coming in marginally higher than expected at 315K, but the four-week average remained unchanged at 315K. Cyclicals outperform: The upbeat economic data lent support to cyclicals, with industrials leading gains. Machinery and multis were the standouts with both groups broadly higher, notably CMI +2.4%, TEX +1.6% and WCC +1.8%. PCAR +5.4% rallied amid takeover speculation. Airlines recovered some of yesterday's sharp losses, with UAL +1.6% and DAL +0.9%, although AAL (0.8%) lagged. Materials were led higher by industrial metals, helped by positive sentiment in China and higher prices with SCCO +3.5%, NOR +3.5% and CLF +4.5% in focus. Gains in consumer discretionary were broad, with retailers and the footwear and sporting goods group among the standouts. PETM +12.5% was the notable outperformer on news of a stake from activist investor Jana. BONT +4.4%, DSW +3.5% and BBY +2.2% were among the other leaders. While tech was in line, semis continued to outperform with the SOX +0.7% bringing its gains on the week to +3.4% and is now +21.6% ytd.
